Megatron Ltd has an equity beta of 1.5. The market risk premium in South Africa is expected to be 5% and the yield on government bonds (risk-free rate) is currently 9.5%. Megatron has issued bonds and its R100 par value bond is currently trading at R94.50. The coupon is 10%. The maturity date is in 5 years’ time and the corporate tax rate is 28%. Interest is payable annually in arrears. What is the weighted average cost of capital if the target debt to equity ratio is 50% and the cost of equity and debt is 15% and 8% respectively?

Answer rating: 100% (QA)

Cell Reference JK JL 1 Risk Free Rate 0095 2 Market Return 005 0095 0... View the full answer